Realitybase JournalJournalhttp://www.realitybase.org/journal/2015-07-29T03:52:15ZSquarespaceMost read Realitybase posts in September 2014http://www.realitybase.org/journal/2014/10/1/most-read-realitybase-posts-in-september-2014.htmlSkeptic2014-10-01T17:11:41Z2014-10-01T17:11:41ZThe American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken. Obviously, it is the latter.

John Maynard Keynes argued in 1933 that globalization had been oversold. A doctrinaire free trader in 1923, in April 1933 Keynes gave a formal lecture, National Self-Sufficiency, to acknowledge that, while economic internationalization has important benefits, it also has important costs, and he makes a case for relatively more self-sufficiency. "National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford, if we happen to want it." He discusses the reasons why we may want it, including the suggestion that, contrary to the assumption just before the start of WWI, when economic globalization was at its highest point ever, peace may be easier to keep if national economies are not highly integrated. Includes a long quotation from the lecture.

Paul Krugman didn't always have the "Conscience of a Liberal." Describing Krugman's evolution from enthusiastic free trader and conservative economist in the Reagan Administration to self-described liberal. By 2010 he had come to this: "Major growth effects from trade policy, if they exist, must come from unconventional channels. Conventional trade theory DOES NOT justify claims of huge positive payoffs from free trade. In the politics of trade policy, distributional effects can easily swamp concerns about efficiency."

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken. Obviously, it is the latter.

]]>Most read Realitybase posts in July 2014http://www.realitybase.org/journal/2014/7/31/most-read-realitybase-posts-in-july-2014.htmlSkeptic2014-07-31T17:36:03Z2014-07-31T17:36:03ZThe American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken. Obviously, it is the latter.

Paul Krugman didn't always have the "Conscience of a Liberal." Describing Krugman's evolution from enthusiastic free trader and conservative economist in the Reagan Administration to self-described liberal. By 2010 he had come to this: "Major growth effects from trade policy, if they exist, must come from unconventional channels. Conventional trade theory DOES NOT justify claims of huge positive payoffs from free trade. In the politics of trade policy, distributional effects can easily swamp concerns about efficiency."

What will the new economy look like? And when will it be here? The Great Recession officially ended in June 2009 but we didn't know that when this was written in July 2009. Relying on several experts and the data, there did not seem to any good reason to expect a recovery to pre-recession prosperity soon—or ever. (Five years later we are still waiting.)

]]>Most read Realitybase posts in May 2014http://www.realitybase.org/journal/2014/5/31/most-read-realitybase-posts-in-may-2014.htmlSkeptic2014-05-31T22:56:37Z2014-05-31T22:56:37ZThe American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

John Maynard Keynes argued in 1933 that globalization had been oversold. A doctrinaire free trader in 1923, in April 1933 Keynes gave a formal lecture, National Self-Sufficiency, to acknowledge that, while economic internationalization has important benefits, it also has important costs, and he makes a case for relatively more self-sufficiency. "National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford, if we happen to want it." He discusses the reasons why we may want it, including the suggestion that, contrary to the assumption just before the start of WWI, when economic globalization was at its highest point ever, peace may be easier to keep if national economies are not highly integrated. Includes a long quotation from the lecture.

The US trade deficit is tribute paid to foreigners. And it's big. Nobel laureates Paul Samuelson, Joseph Stiglitz, and Paul Krugman and other prominent economists including Dani Rodrik, Alan Blinder, Martin Wolf, Larry Summers, Dean Baker, and even Alan Greenspan have said that the US middle class is net worse off as a result of persistent trade deficits averaging 3% of GDP.

]]>Most read Realitybase posts in April 2014http://www.realitybase.org/journal/2014/5/6/most-read-realitybase-posts-in-april-2014.htmlSkeptic2014-05-06T16:16:18Z2014-05-06T16:16:18ZThe American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

John Maynard Keynes argued in 1933 that globalization had been oversold. A doctrinaire free trader in 1923, in April 1933 Keynes gave a formal lecture, National Self-Sufficiency, to acknowledge that, while economic internationalization has important benefits, it also has important costs, and he makes a case for relatively more self-sufficiency. "National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford, if we happen to want it." He discusses the reasons why we may want it, including the suggestion that, contrary to the assumption just before the start of WWI, when economic globalization was at its highest point ever, peace may be easier to keep if national economies are not highly integrated. Includes a long quotation from the lecture.

How mortgage backed securities increased systemic risk The securitization of mortgages and other debt obligations gives senior tranche holders less risk of individual defaults, but increases the risk to a general economic downturn. The increase in systemic risk was not generally appreciated but is demonstrated by Coval, Jurek, and Stafford in The Economics of Structured Finance. The paper contains exceptionally lucid descriptions of how structured finance works and uses simple examples to demonstrate the sources and magnitudes of systemic risks. This post is my summary of the paper.

Obama's Legacy—If Any Just before Obama's second inauguration, I examined pundits' lists of first term accomplishments and concluded, "If Obama is going to be remembered as other than a seat-filler, it's going to have to be for something he does in his second term."

Will we bring back manufacturing or outsource innovation too? Business leaders and economists agree that innovation needs to be collocated with manufacturing and that good American R&D jobs and most of the benefits of innovation are increasingly moving to Asia. I updated this post with supporting material many times, mostly in early 2010.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Consensus, the ultimate dog's breakfast. In praise of just enough votes. Arguing that supermajority requirements and efforts to achieve bipartisan support for legislation tend to make the results worse, not better, in a legislature where there is little or no ideological overlap between the parties. Obamacare is an example where many diluting, counterproductive, and complicating concessions were made to Republicans but no Republican votes were received in exchange.

How mortgage backed securities increased systemic risk The securitization of mortgages and other debt obligations gives senior tranche holders less risk of individual defaults, but increases the risk to a general economic downturn. The increase in systemic risk was not generally appreciated but is demonstrated by Coval, Jurek, and Stafford in The Economics of Structured Finance. The paper contains exceptionally lucid descriptions of how structured finance works and uses simple examples to demonstrate the sources and magnitudes of systemic risks. This post is my summary of the paper.

Obama's Legacy—If Any Just before Obama's second inauguration, I examined pundits' lists of first term accomplishments and concluded, "If Obama is going to be remembered as other than a seat-filler, it's going to have to be for something he does in his second term."

The other American Dream of rising incomes—Horatio Alger stories One of my earliest and longest inquiries into upward socioeconomic mobility in America. The rate of upward mobility has been declining since 1980, and Horatio Alger stories are now more likely to occur in Denmark, Norway, Finland, Canada, Australia, and other advanced nations than in the US.

Will we bring back manufacturing or outsource innovation too? Business leaders and economists agree that innovation needs to be collocated with manufacturing and that good American R&D jobs and most of the benefits of innovation are increasingly moving to Asia. I updated this post with supporting material many times, mostly in early 2010.

]]>Most read Realitybase posts in January 2014http://www.realitybase.org/journal/2014/2/13/most-read-realitybase-posts-in-january-2014.htmlSkeptic2014-02-13T15:23:20Z2014-02-13T15:23:20ZThe other American Dream of rising incomes—Horatio Alger stories One of my earliest and longest inquiries into upward socioeconomic mobility in America. The rate of upward mobility has been declining since 1980, and Horatio Alger stories are now more likely to occur in Denmark, Norway, Finland, Canada, Australia, and other advanced nations than in the US.

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.

How mortgage backed securities increased systemic risk The securitization of mortgages and other debt obligations gives senior tranche holders less risk of individual defaults, but increases the risk to a general economic downturn. The increase in systemic risk was not generally appreciated but is demonstrated by Coval, Jurek, and Stafford in The Economics of Structured Finance. The paper contains exceptionally lucid descriptions of how structured finance works and uses simple examples to demonstrate the sources and magnitudes of systemic risks. This post is my summary of the paper.

The other American Dream of rising incomes—Horatio Alger stories One of my earliest and longest inquiries into upward socioeconomic mobility in America. The rate of upward mobility has been declining since 1980, and Horatio Alger stories are now more likely to occur in Denmark, Norway, Finland, Canada, Australia, and other advanced nations than in the US.

Americans have more than enough education to fill 21st Century jobs. A chart shows that only the 3% of workers with Ph.D.s and professional degrees had increasing earnings, while earnings of those with masters and bachelors degrees or some college declined even more than the earnings of those with high school only. The fact of falling earnings is inconsistent with the claim that there is a shortage of college-educated workers.

How mortgage backed securities increased systemic risk The securitization of mortgages and other debt obligations gives senior tranche holders less risk of individual defaults, but increases the risk to a general economic downturn. The increase in systemic risk was not generally appreciated but is demonstrated by Coval, Jurek, and Stafford in The Economics of Structured Finance. The paper contains exceptionally lucid descriptions of how structured finance works and uses simple examples to demonstrate the sources and magnitudes of systemic risks. This post is my summary of the paper.

Obama's Legacy—If Any Just before Obama's second inauguration, I examined pundits' lists of first term accomplishments and concluded, "If Obama is going to be remembered as other than a seat-filler, it's going to have to be for something he does in his second term."

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.